Metals and Miners are in the timing window for cycle lows and prices may be very close to bottoming.
Gold needs to close above Wednesday’s $2358 high to reverse the post-Fed breakdown and support an immediate bottom.
Headline inflation continues to decelerate and at this rate CPI could move towards 2.5% by October; provided we don’t get a spike in oil.
Base Effects
The strong inflation prints of 0.5% and 0.4% last August and September are set to expire in the coming months. May CPI was flat at 0.0%, and June is projected at 0.1%. If monthly inflation remains tame at 0.2% or lower, the headline number could be nearing 2.5% by October, giving the Fed the green light to start cutting.
Cycle Update
GOLD DAILY- Gold officially closed below the 50-day EMA and finished inside our cycle target box. A daily close above Wednesday’s high ($2358.80) would reverse the post-Fed breakdown and support a bottom. Once a bottom is confirmed, our work supports a strong rally into August.
SILVER- Silver tagged the 50-day EMA and finished inside our target box. Closing back above $30.00 would support a cycle low. The setup remains strong, and we think silver could shoot much higher from here.
GDX- Miners dipped to fresh lows and closed progressively below the 50-day EMA. We remain in the June target box. A daily finish above $34.06 would support a bottom.
GDXJ- Juniors are well within the June target area, and a close above $42.65 would support a cycle low and new advance.
SILJ- Silver juniors closed well below the 50-day EMA, reaching the mid-range of our target box. Prices need a close above $11.59 to support a bottom. Otherwise, the decline could extend into next week.
Conclusion
Metals and miners are very close to completing cycle lows. From here, we expect aggressive upside into August or September with a $2800 target for gold.
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